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Sunday, 7 November 2010

Women view gold jewellery displayed in a shop at the Gold Souq in Dubai, January 16, 2008.

Credit: Reuters/Jumana El Heloueh/Files

DUBAI | Sun Nov 7, 2010 4:28pm IST

(Reuters) - Retail gold sales volumes in Dubai and Abu Dhabi fell by around 10 percent on the year in October as high gold prices deterred consumers despite the Indian festive season, retailers said on Sunday.

"Ahead of Indian festival of Diwali demand is usually strong but this year prices are just too out of reach for a lot of people...we saw a drop of around 10 percent in volumes," said Tushar Patni, director of Ajanta Jewellers, one of the largest retailers in the emirate capital of Abu Dhabi.

Spot gold hit a record high above $1,397 an ounce, then slipped back to $1,393.15. Investors often buy the metal as an inflation hedge and alternative to the dollar when the U.S. currency weakens.

Abu Dhabi stocks rose the most in more than two weeks as global shares and oil gained after the Federal Reserve announced another round of bond purchases to boost the world’s biggest economy. Dubai’s benchmark dropped.

Global stocks jumped last week after the Fed announced plans to buy an additional $600 billion of Treasuries in a second round of quantitative easing. The central bank kept its pledge to hold interest rates low for an “extended period” after Chairman Ben S. Bernanke said the program could be modified in some way. The dollar last week fell the most in four against the currencies of six major trading partners.

Arabtec Holding PJSC reported a 96 percent slump in third-quarter profit, missing analysts’ estimates as the biggest construction company in the United Arab Emirates was hurt by project cancellations.

Net income dropped to 6.8 million dirhams ($1.9 million) from 166.6 million dirhams a year earlier, Dubai-based Arabtec said in a statement to the bourse today. The median estimate of six analysts was for a profit of 105 million dirhams, according to data compiled by Bloomberg.

Half of all planned real-estate projects in Dubai were canceled or face that fate after the credit crisis eroded demand and a housing glut drove down property prices. Construction companies in Dubai are searching for contracts elsewhere.

In the spring of 1931 it was the failure of the Austrian bank Credit Anstaldt that triggered a breakdown in the global banking system that deepened the Great Depression and led to the failure of thousands of banks around the world.

The picture now emerging from the Bank of America Corporation is a worrying parallel. Only last April BoA looked a recovery success story with its government bailout repaid and shareholders who bought at the bottom sitting pretty.